Brexit From the Other Side

If a comprehensive deal involving everything from citizens’ rights to free trade gets passed by the thirty-one parliaments it needs the consent of by March 2019, it risks being quite by chance. In the betting world, it is like an “accumulator”, in which you bet on the outcome of multiple events at the same time and each event you add considerably lengthens your odds. For the UK-EU deal, the only element that could shorten the odds and bring optimism to the table is good will; good will being the desire to get a successful resolution quickly. If all thirty-one parliaments, the EU Commission and the British Government share in this good will, the chances of the huge number of necessary events all having a successful outcome will be much higher. So, do they have this will?

Many politicians and normal citizens on the European side feel personally insulted and upset that the British decided to leave. As a Brit living partially in Germany, I hear this a lot. “Couldn’t the Brits see what we are trying to do? The EU is about peace and cooperation!” There is a European dream for both for European politicians and for those on the streets of Paris, Hamburg and Barcelona of ever-improving European cooperation and of strength in unity.

For the Germans, deeply scarred by their past, this vision is both a way of ensuring forever that what ended seventy-two years ago can never begin again, and a way of believing in something bigger than themselves at a time when German patriotism is viewed with suspicion.

After its bloody history over the last century and a half, most other Europeans also long for a stable peace and cooperation. Especially in today’s world, with a less reliable United States and an increasingly powerful China, the opinion of many is that sticking together is how we can protect our values best.

For them, the British people stuck two fingers up at this noble dream. If I had not spent time in Europe, not only in Hamburg but in Berlin and Barcelona too, speaking not only to normal citizens but aspiring politicians too, I would not have understood this mindset.

Immediately after the vote, a Spanish friend wrote to me:

“This is a sad day for Britain, maybe even a sad day for the European dream. I can affirm that I would rather not love a brother who in a 52% confidence doesn’t want to love me back.”

The EU was never about trade. It is about European peace and brotherhood. And our withdrawal from that accord signalled to our friends across the Channel and North Sea something much deeper than a mere dislike of overly bureaucratic apparatus; it signalled that we were not interested in that dream of unity. And now, after rejecting them, we come back asking for free trade without the unity.

That is what Germans, Spaniards, Poles, Frenchmen and Belgians mean when they say we can’t have the good parts without the bad, that we can’t cherry-pick. They mean that we can’t have the free trade without the unity, and the unity requires compromises that we may not like. I heard this sentence – “you can’t have the good parts without the bad” – so many times from European friends without fully understanding that.

In my discussions with them, I asked why one needs to agree to a common agricultural policy to also have free trade, for example. I looked at the EU as merely a practical tool to enhance trade. For me and I believe, for many Britons, it is NATO which primarily keeps the peace.

Before further misunderstandings arise between us and our European friends, it is important to understand how they view it; why it is that German car manufacturers are willing to follow the EU’s hardline negotiating position potentially to their own disadvantage, for example.. If you believe in such a dream of European unity and the European Union is the embodiment of it, you will want to protect it. That means that the British exit must be painful enough that it deters others from following that path. It must be a warning to the peoples of Europe.

Deal or No Deal?

But that doesn’t mean the European Union is pushing for no deal, as some of its own members could suffer the most. There are serious risks for Ireland and other risks for countries like Poland, who rely on British trade and have many of their citizens living in Britain. For the EU, therefore, the negotiations are a delicate mix of competing priorities – the political priority of the European Union’s wellbeing, the economic priority for some of its smaller members and the political priority of peace in Ireland.

Before Mr. Barnier meets Mr. Davis, he has to agree what this balance will be with 30 agitated stakeholders, each one holding a veto to the final deal. This means that Mr. Barnier has limited room to manoeuvre, even if he wanted to.

An example of this is the divorce bill. The EU member states naturally agreed that Britain should pay as much money as possible. They all know that when Britain’s large contributions to the EU come to an end, someone will have to pick up the slack and so they would prefer, for now, to kick the can down the road. This is likely a position they are unanimous on, since it’s in all their interests. When Mr. Davis’ team started picking apart these financial demands line by line, therefore, Mr. Barnier’s team were shocked. Britain is aware that she has no legal obligation to pay a penny but is also aware the she does have moral obligations to pay for the EU budget she agreed to in 2014, which lasts until 2020.

This is an example of where we can see good will lacking from the EU side. In her Florence speech, Theresa May accepted that Britain should contribute what she had agreed to, but not a finger-in-the-air figure of £55bn that the EU Commission President wants nor Mr. Barnier’s demands for €40bn to €60bn, which include long-term spending plans. The ICAEW – the main accountancy body in England and Wales – estimates that the worst-case scenario for Britain is £30bn and a more likely scenario of £15bn. This is broadly in line with the pro-EU Financial Times’ own estimate of £18bn and the IEA’s estimate of an ‘upper-limit’ of £26bn. It may be in EU member states’ interests to make Britain pay much more than her fair share, but such a demand shows a lack of good will that could be devastating to a cordial agreement being agreed within the strict time limits available.

A dangerous myth that still exists for a few on both sides is that without a deal, Great Britain will come humbly back to the EU, realising her terrible mistake. To entertain even a small hope for this outcome is both unrealistic and damaging to the chances of a good deal for both sides. A recent poll by YouGov found that 68% of the British public want to get on with leaving the European Union.

In 1988, a Corporate Restructurer at the sugar company Tate & Lyle wrote a book called “How to Turn Round a Company”. In it, he argued, “It is quite normal to feel that the list of demands seems enormous and that it is inconceivable that the stakeholders and various people involved will accept it. This concern should be ignored, since at this stage everybody has a lot to lose. That can concentrate minds wonderfully.” This man went on to become the Secretary of State at the Department for Exiting the European Union – David Davis. there are reasons to be positive about a deal – everybody does have a lot to lose and this indeed can concentrate minds wonderfully. It may not be today or tomorrow that the real will for a deal appears, but as economic realities become clearer for EU member states and any hope that Britain may humbly come back to the EU disappears, pragmatism and a desire for friendly future relations can win through.

The views expressed in this article are those of the author and do not reflect the views of the BFPG. The BFPG is an independent not for profit organisation that encourages constructive, informed and considered opinions without taking an institutional position on any issue.
Thomas Hogg
tn@bfpg.org.uk

Thomas Hogg is an international entrepreneur who lives in Hamburg and London. He speaks German, Spanish and French and worked briefly for David Davis in a civil liberties campaign. He currently works on the leadership team at an international executive network from companies like Google, Facebook, John Lewis and Zalando.